1 The Tribunal grants possession of the premises being the Palace Entertainment Complex at Lower Esplanade, St Kilda, described in Certificate of Title Volume 9570 Folio 486 to the applicant.

2 Counterclaim dismissed.

3 The questions of damages and costs are reserved.

Dr Pannam, QC and Mr R. Hay, instructed by Mitrakis Savas & Co

Mr G. Garde, QC and Mr P. Fox, instructed by John Cain, Victorian Government Solicitor

1 On 8 February 2006 in the Victorian Legislative Assembly the Minister for Planning moved the Second Reading of the Land (St Kilda Triangle) Bill 2006. According to the Minister the land affected was 'a key component of St Kilda's Edge Strategy prepared by the City of Port Phillip to rejuvenate the St Kilda Foreshore'. He continued:

The St Kilda triangle site is bounded by Jacka Boulevard, Cavell Street and the Upper Esplanade and is in urgent need of redevelopment. The land consists of permanent and temporary reserves established under the Crown Land (Reserves) Act 1978. The City of Port Phillip manages the reserved Crown land as committee of management. The unreserved Crown land is occupied by the Palais Theatre and the Palace Entertainment Complex under separate 50-year leases. The Department of Sustainability and Environment directly manages these leases, which both expire on 31 March 2006.

2 This proceeding concerns the area known as the Palace Entertainment Complex. The premise of the legislation, as the Minister's speech indicates, is that the Palace and an adjacent area occupied by the historic Palais Theatre are areas of Crown land subject to leases whose expiry day was 31 March this year. Bradto Pty Ltd is the lessee of the Palace site. It has declined to vacate the complex, contending that it has an entitlement to a further Crown lease for a term of years lasting until 2042, that is for a term of 60 years commencing in August 1982. The State as applicant in this proceeding seeks an order for possession of the Palace site and consequential relief against Bradto. Bradto counterclaims for relief establishing its entitlement to the further Crown lease.

3 The area which is now the Palace complex was part of an area of Crown land reserved for public recreation in 1884. It was the subject of a series of arrangements known as 'permissive occupancies' granted by the St Kilda Shore Committee initially to a Mr Herman Frank Phillips and in 1946 to Palais de Danse Pty Ltd. According to John Butler Cooper in his work The History of St Kilda from its First Settlement to a City and After (1840-1930) (Vol. 2) 207 the Phillips brothers, Herman, Frank and Leon were the beach's best-known caterers for amusements'. A document produced in Proceeding 192/2005 (a companion proceeding relating to the Palais Theatre) shows that Mr Herman Phillips assigned his interest in his permissive occupancy to Palais de Danse Pty Ltd on 26 May 1927. A large ballroom known as the Palais de Danse was erected on this land during this period. Similar tenure arrangements were made for the adjacent area known as the Palais Theatre and the famous amusement park 'Luna Park'. In 1955 these three areas were under the control of the same interests albeit through different lessee companies. Messrs Arthur Robinson & Co, solicitors for the three companies made representations to the Secretary for Lands (the official in charge of the Department of the State of Victoria then responsible for the management of Crown lands) raising legal doubts as to the validity of the 'permissive occupancies'. The Secretary wrote to the Chairman of the St Kilda Shore Committee advising of the representations and concluding:

It is considered that the best course to pursue would be for action to be taken with the view to this Department issuing appropriate leases to the respective companies.

4 Since the land occupied by the theatre and the ballroom were subject to permanent reservations, the Department advised the Minister that legislation would be necessary to revoke those reservations with a view to clearing the way for the grant of leases under the Land Act 1928. Parliament enacted statute No. 5909 known as The Revocation and Excision of Crown Reservations Act 1955. Section 2 of that Act authorised the Governor in Council by order published in the Government Gazette to revoke the reservation of a number of pieces of Crown land identified in the First Schedule including Item 13 which comprised, inter alia the Palace site. On 31 January 1956 in exercise of the power granted to him by the statute, the Governor in Council revoked the reservation of the subject land. On 10 July 1956 His Excellency accepted a recommendation from the Secretary of Lands and the Commissioner of Crown Lands and Survey

Pursuant to Section 125 of the Land Act 1928 for the lease for a site for amusement and recreation for a term of 50 years from 1 April, 1956 be granted to Palais de Danse Pty Ltd in respect of three roods 33 perches of land being allotment 103 of St Kilda Parish of Melbourne South subject of covenants and conditions and provisions of the draft lease marked TD6/7/56 herewith.

5 The lease was executed and registered under the terms of the Transfer of Land Act 1954 and designated Volume 1204 Folio 108. The lease provided that the site was to be used for 'amusement and recreation'. The land was identified by a map and as Crown Allotment 103 with its frontage to the Lower Esplanade. Clause 3(e) entitled the lessee to remove the buildings at or prior to the end of the 50 year lease. This was the area on which the ballroom was erected.

6 On 20 November 1956 the Governor in Council accepted a recommendation from the Secretary for Lands and the Commissioner for Crown Lands and Survey that a lease be granted to Palais de Danse Pty Ltd for a term of five years from 1 April 1956 over Crown Allotment 103A adjacent to the ballroom allotment. In March 1960 Mr Curwen, a Director of Palais de Danse Pty Ltd contacted Mr Bult of the Lands Department whose company wanted to extend the kitchen facilities in the Palais de Danse 'over the 30 links strip adjoining the southern boundary of Allotment 103'. The lease of Allotment 103A provided that no buildings should be erected on the area and that it should remain unfenced. Mr Bult suggested a solution. He said:

To overcome this difficulty, it was explained to Mr Curwan [sic] that the lease for Allotment 103A could be surrendered as to the parts outlined in red and purple on Plan A/18.3.60 herein, and under the provision of Section 346 of the Land Act should not exceed 10% of the adjoining use could be added to that lease as an additional rental which would be assessed on a proportionate basis to that charged for the main lease.

7 On 22 June 1960 Mr Bult recommended that the additional area 14.95 perches be surrendered from the lease of Allotment 103A and added to the lease of Allotment 103 with an additional rent for the later of ₤102 per annum. This recommendation was approved on 25 August of that year. In a letter dated 19 October 1960 Mr Curwen asked the Secretary of Lands for an agreement 'in writing' to give effect to this proposal. He observed:

In order that the companies may write off the improvements proposed to be effected under the new lease, we would ask that all improvements effected after the date of the new lease revert to the Crown, and further the companies will have no tenant rights as far as they are concerned.

8 A Departmental officer, Mr McAllister wrote a memo suggesting that at implementation the approval would entail:

... the line of demarcation between the two lots of improvements would be the original southern survey boundary of Allotment 103, those on the original part not to revert, and those on the 30 link strip to revert. The preliminary plans lodged by Mr Curwen showed the proposed additions were about 60' wide (including the canopies), whereas the width of the strip is only 30 links (19' 6"). The only new improvements on the added strip will be a couple of canopies, and the reception rooms and kitchens etc, will be on the original leasehold. Apparently it is intended to demolish part of the old building to erect the new improvements.

9 In a memorandum dated 6 February 1961 Mr McAllister noted that to give effect to Mr Bult's recommendation of 22 June 1960 it would be necessary to issue a new lease which would be:

Subject to an improvement covenant over part as shown in blue on Plan "A" 6/2/61 on a condition that no buildings or fencing are to be erected on the part shown in blue.

10 The recommendation was put to the Board of Land and Works by Mr McAllister on 6 February 1961 to give effect to these matters and was approved by the Board on 30 March. The recommendation was made to His Excellency in accordance with these proposals and approved by him on 11 April 1961. A new lease was executed and registered under the Transfer of Land Act. This lease provided for the lessee to expend not less than ₤60,000 in erecting buildings on a strip of land at the rear of the site and coloured red on the plan, such building to be completed by 1 April 1963. These buildings became known as the 'Stardust Room' and were used for receptions. Those buildings were to revert to the Crown at the expiry of the lease. The tenant's right of removal of improvements was restricted to the area of the map coloured yellow; that is the area occupied by the Ballroom.

11 In accordance with the Land Act and the terms of the lease rental was reviewed in 1966.

12 Late on the afternoon of Friday 27 December 1968 a fire broke out at the Palais de Danse complex. According to a report in the Age newspaper:

The blaze started in a ceiling between the Stardust Reception Centre and the Palais Ballroom. Within minutes the 55-year-old timber and stone ballroom was blazing from end to end. Smoke billowed hundreds of feet into the air and could be seen throughout the city.

Within half an hour the blaze had reduced the ballroom to a smouldering hulk and firemen were fighting desperately to save the $160,000 reception centre built only six years ago.

13 On 8 January 1969 a delegation representing Palais de Danse Pty Ltd headed by its Chairman of Directors, Mr Sloman and including Messrs Connolly, Hart (of Arthur Robinson & Co) and General Manager Mr Bromley called upon the Secretary of Lands, Mr Holt who was accompanied by his assistant, Mr Lepp. Speaking for the company, Mr Sloman said:

At this stage our plans for the future were uncertain - depending on the cost of re-building, and the amount of money available from the Insurance Company, and also it would not be an economical proposition to carry out any major capital construction until the lease was extended.

14 The Secretary pointed out that upon re-building, requirements imposed by the Melbourne and Metropolitan Board of Works would require additional car parking. He also noted that the Country Roads Board might wish to widen Marine Parade and this might deprive the company of its rear access from Marine Parade. Mr Wilson of the Department of Crown Lands and Survey noted in a memorandum of 31 December 1968 that both the Palais de Dance ballroom and the Stardust room were covered by a single insurance policy held in the name of the Secretary of Lands with maximum coverage of $440,000.

15 According to an internal Palais de Danse memorandum as to matters to be raised with the Secretary of Lands at a proposed meeting, the company believed at that time:

It is not possible to make a decision on the re-building of the Palais de Danse until we have some idea of the Minister's reaction in extending the present lease which expires in 2005 [in fact it expired in 2006] which is 36 years from now - should the lease either be extended say for a further 14 years, or a new lease written for 50 years. If possible, a greater length of time would be desirable.

16 On 7 February the General Manager, Mr Bromley wrote to the Secretary of the St Kilda Shore Committee. He said that his Board had decided to reinstate the Stardust room and the kitchen area immediately and that plans were being drawn up for its rehabilitation. No decision had been made he said with respect to reinstatement of the ballroom:

As it would not be an economical proposition to rebuild unless the lease can be extended.

17 He noted that the company would apply to the Minister for an extension of its tenancy to an adjacent area now used for a 'miniature train'. He concluded without the additional area there might be insufficient car parking and 'our plans for the building could be in jeopardy'. He asked the Secretary to 'submit our application for the tenancy of the miniature train site to your Committee'. On 14 February 1969 Mr Bromley wrote to the Secretary for Lands stating that his company was hopeful of re-building but

It is considered it would not be an economical proposition to reinstate the building under the terms of the present lease, which expires 1 April, 2005 ... we therefore request your Department's consideration to the surrendering of the present lease and the issuing of a new lease in lieu thereof, for a term of 60 years from the date of surrender.

18 Mr Bromley estimated the cost of reinstatement would be 'in the vicinity of $400,000, excluding furniture and fittings'. This would be 'in addition to the reinstatement of Stardust'.

19 The Secretary responded on 13 March 1969 noting the proposal including a new lease of 60 years 'from now'. He continued:

Action in respect of the grant of any new lease would be subject to the definition of the final boundaries of the leasehold having regard to:-

(a) the effect of the proposed widening of Marine Parade on the leasehold; coupled with

(b) the provision of alternate access to the Stardust room from Cavell Street; and

(c) your request that all the car park area, including the miniature train site, be included in your lease.

The annual rental for the first 10 year period of any new lease would be determined after the above land issues have been resolved.

20 The letter stated that the Department would be willing 'to seek the consent of the Governor in Council' for the new lease. Mr Bromley wrote to the company's Chairman, Mr Sloman on 14 March enclosing this letter. He told Mr Sloman that Mr Lepp had informed him by telephone that 'only the State Governor' could sign a lease of the premises. According to Mr Bromley the letter meant that the Minister 'has in fact committed ... to a new lease'. The matter was then referred to Arthur Robinson & Co for advice. This firm responded by letter dated 25 March 1969 as to the effect of the correspondence. The letter noted that the oral advices of Mr Lepp had not been confirmed by letter. It concluded:

Having regard to the possibility that a change of Government could bring a change in policy with regard to leases, we think it would be wise to seek a definite written confirmation by the Department of Mr Lepp's telephone advice that the letter of 13 March may be taken as a definite decision that a new lease will be granted.

21 Mr Bromley spoke to Mr Hart the author of the letter and at his request Mr Hart spoke to Mr Lepp who, it was said, agreed to furnish a more definite response upon written request. Mr Hart wrote to the Secretary by letter dated 31 March 1969 stating:

We feel that your letter [of 13 March] does not give to our client the security which it could reasonably expect to have before embarking on the expenditure of a large sum of money.

22 The letter sought confirmation that the Department would recommend to the Governor in Council that he grant a new lease and sought advice as to when this would be done. Mr Lepp on behalf of the Secretary wrote on 11 April 1969 advising Arthur Robinson & Co:

It will be recommended that consent be given subject to the new lease being issued when your client has expended not less than $400,000 on a new building, has re-installed the Stardust room and when the lease boundaries have been redefined in association with the widening of Marine Parade.

23 The letter stated that advice would be given when the necessary Order in Council had been obtained. On 15 April 1969 the following order was submitted to His Excellency by Sir William McDonald, Minister of Lands and approved by him. Since the order is central to the matters in dispute in this proceeding I will set it out in full:

PURSUANT to the provisions of Sections 134 of the Land Act 1958 RECOMMENDED that in respect of the Crown lease held by Palais de Danse Pty Ltd of Allotment 103, at St Kilda, Parish of Melbourne South, for a term of 50 years from the first April 1956, the Governor in Council consent to the grant of a new lease for a term of 60 years from the date to be determined on the condition that such new lease shall not be executed until such time as:-

(1) The lessee has expended not less than $400,000 on the erection of a new building on the demised premises;

(2) The lessee has reinstated the reception room and kitchen erected on the demised premises and recently damaged by fire;

(3) The boundaries of the demised premises have been redefined having regard to the widening of Marine Parade at St Kilda;

(4) The lessee has complied with the statutory requirements of the Land Act 1958.

24 On 18 April 1969 Mr Lepp wrote to Arthur Robinson & Co advising them of the terms of the Order in Council. As to the fourth of the conditions of the grant of the new lease, he observed:

Your client company will be advised of statutory requirements when the other matters are finalised.

25 $400,000 today is little more than the price of a modest suburban residence. In 1969 however it was a very considerable sum of money. When Mr Bromley wrote to the St Kilda Branch of the National Bank of Australasia Limited (one of the major banks of the era and predecessor of the present National Australia Bank Limited) seeking a loan of $300,000 for his company, the Branch Manager replied in a letter dated 24 April 1969 observing:

You will appreciate that a not inconsiderable loan such as this is a decision for the Board of the Bank ...

26 The company's accountant, J.B. Eastwood and Etherington reported to Mr Bromley by letter dated 24 April 1969 upon the financial viability of reinstatement. Their conclusion was favourable but was given upon the premise that:

The Department of Lands has consented to grant a new lease for 60 years from the date to be fixed in the near future, ... it is understood that the lease rental for the first 10 years will be on the same basis as that payable under the company's present lease which will be surrendered.

27 On 11 November 1969 Mr Bromley again wrote to the Secretary. He said that Palais de Danse's architects had prepared preliminary sketch plans which he suggested should be discussed with the Department, the Port Phillip Authority and the Foreshore Committee. The plan entailed putting the new buildings to the Marine Parade frontage 'leaving the existing site of the Palais de Danse largely free for carparking, which would be entered from the Lower Esplanade'. Mr Bromley said that his company had negotiated options to purchase the occupancy rights of neighbouring owners, Green and Thomas for attractions known as 'Swirl' and the 'speedway' for $30,000 and with Mr Hall-Kenny for the occupancy rights then used for attractions known as 'Scoota Boats' and the miniature railway for $34,000. He said:

This would represent a total contribution by my company of $64,000 towards the clearing of this outstanding area for an attractive new development.

28 He said his company had considered but rejected the possibility of also acquiring the site of Mr Hall-Kenny's 'Merry-go-round' and a 'rifle range' conducted by Mr Foster. He said that its development did not require that space 'and the space which they currently occupy would as we see the development, be more properly allocated to car parking and public open space'. He said the plans entailed a set back to enable Marine Parade to be widened. On this basis Mr Bromley said that his company wished:

To formally apply for a Crown lease for 70 years over the area currently occupied by the Palais de Danse, Mr Hall-Kenny's 'miniature railway' and 'scoota boats', Messrs Green and Thomas' 'swirl' and 'speedway areas' and the cottage currently occupied by the Foreshore Committee.

29 He said if necessary his company would contribute $64,000 to the Crown if the Crown 'bought out' the rights of the other amusement operators to enable the proposed development to go forward. He envisaged expenditure at approximately $600,000. Meanwhile, the ground floor of the Stardust Room had been partially reinstated at a cost of $5,680.44.

30 The Secretary for Lands in a letter of 20 November 1969 acknowledged Mr Bromley's proposal and stated he would 'advise you in the matter as soon as practicable'. Mr Sloman, the Chairman of Directors of Palais de Danse wrote a letter dated 22 December 1969 to the Minister, Sir William McDonald. He observed:

We understand that our submission cannot be fully considered until such time as road planning in the vicinity has been completed and approved by all the relevant authorities.

31 Mr Sloman sought the Minister's co-operation asking for an early decision on these matters. On the same day Mr Sloman wrote a personal letter to the Minister seeking his assistance. He said that discussions with the Department had been fruitful but 'the matter is now held-up pending a decision with regard to the road planning'.

32 Mr Sloman wrote to the Secretary for Lands on 20 January 1970 observing that the Crown held insurance monies of over $400,000 and that his company had had no official communication with respect to interest on such monies. He continued:

As you are aware, rent in full has continued to accrue and has been paid since the fire destruction occurred, but rebuilding cannot proceed until a final decision with regard to the road is made.

33 Mr Sloman sought an assurance 'that the insurance monies are invested pending payment to my company and that interest has been credited to my company's account'. Mr Lepp wrote a minute to the Secretary on 6 February 1970 reciting the history of the matter and observing:

The question of paying interest on the insurance proceeds as well as the proceeds itself available to the company is, I think, solely a matter for the Treasury.

34 The Secretary referred the matter to the Director of Finance at the State Treasury by letter dated 3 March 1970. On 10 March Mr Bromley again wrote to the Minister, Sir William McDonald, complaining that the re-building could not go forward 'due to inability to obtain a new lease'. He said that the Department had 'indicated its willingness to recommend the granting of a new lease for a period of 75 years' but that this could not go forward

until a decision had been reached concerning the widening of Marine Parade. We are informed that such decision is subject to the approval, not only of the Department of Crown Lands, but also under other semi-Government bodies.

35 He requested that pending finalisation the rental under the existing lease of $3,646 per annum 'be waived'. He urged an early approval for the redevelopment plan.

36 A Departmental officer, Mr Gibney, wrote a memorandum to the Secretary for Lands on 24 March 1970. He noted that the Stardust Room had been rebuilt 'as to kitchen and ground floor' at a total cost of $12,100.44 with further outlays of $13,596.86 for site clearing and demolition works. This left a balance of $414,302.70 of insurance proceeds held in trust. Mr Gibney noted that a number of issues stood in the way of rebuilding the old ballroom - approval under the Town and Country planning legislation and a decision by the Country Roads Board as to the widening of Marine Parade. He did however observe as to this matter that it was not of vital importance. The CRB could negotiate with the lessee on resumption of compensation at any time. Finally Ministerial approval would be required. He noted also that the City of St Kilda has 'prepared a grand and sweeping scheme for re-development of a large area of the St Kilda foreshore although the plan was bold and imaginative' there were difficulties with regard to finance and 'acceptance of the plan by all the authorities concerned'. Mr Gibney recommended that Palais de Danse be advised that its preliminary plan for re-building was acceptable and that it should obtain the necessary town planning permits. The Department should, he suggested, give every support.

37 On 17 April 1970 Mr Bromley paid the quarterly rent for the site 'under protest'. Meanwhile a conference of officers of interested authorities was convened by the Secretary for Lands on 29 April 1970. This conference included representatives of the Country Roads Board, the Town and Country Planning Board, the Traffic Commission, the Melbourne and Metropolitan Board of Works, the Department of Crown Lands and Survey, St Kilda City Council, the Port Phillip Authority and the St Kilda Shore Committee. This conference concluded that the Port Phillip Authority should 'prepare as soon as possible a re-development plan of the "little Luna Park" area'. The Country Roads Board was to 'arrange for the appropriate zoning of the relevant strip [for road widening] by the MMBW and to declare the alignment under the Country Roads Act'. Implicitly therefore, Mr Gibney's advice to the Secretary was not accepted and the Palais de Danse proposal was to be 'put on ice' pending the preparation and consideration of the wider re-development proposal. Meanwhile in a letter dated 7 May 1970 Mr Holt the Secretary for Lands sought advice from the Crown Solicitor whether he 'as Secretary for Lands, could legally release the insurance monies so far as the "Palais Ballroom" is concerned to the lessee company under the circumstances as presently existing'. Meanwhile, the Secretary wrote to Mr Bromley on 11 May 1970 stating that:

There is no power to meet your request that the rental (or for that manner any part thereof) payable in respect of the lease be waived pending rebuilding.

38 He said the issue of the insurance monies had been referred to the Crown Solicitor. On 19 May 1970 the Town Clerk of the City of St Kilda wrote expressing his Council's

apprehension and disquiet of the suggestion outlined [in the notes of the conference of 29 April 1970] and to inform you that it is currently investigating alternative proposals.

39 By the middle of June 1970 matters seemed to have advanced nowhere. Mr Bromley wrote to the Secretary on 19 June complaining again about the continued requirement for the payment of rental and once again asking for interest on the insurance monies. He noted that the company was obliged to reinstate the Stardust Room but not the Ballroom. He said it was unintentional that the insurance for both buildings had been combined

and we feel if the sum insured had been separated, the Department would only be holding a small amount of money as under the terms of the lease we were only liable to reinstate the Stardust in case of fire. In view of the above, we feel our request for interest is not unreasonable.

40 On 19 June 1970 an article appeared in the Age newspaper headed 'Council to fight highway "grab" '. It appears from this article that the Country Roads Board was considering a proposal that would cut a 50 foot wide strip off the St Kilda Foreshore Gardens entailing widening Beaconsfield Parade to eight lanes and Marine Parade to six lanes. The article noted that the Council had written

To the new Minister for Lands (Mr Borthwick) asking that all plans be halted until the Council's town planners, Clark Gizard Pty Ltd (sic) can carry out a full survey'.

41 The Secretary wrote to Mr Bromley on 20 July 1970 stating that the issue of the insurance money and interest 'have proved to be difficult legal problems which have not yet been clarified'. In a memorandum dated 22 June 1970 with respect to the proposed widening of Marine Parade, a Departmental officer observed:

It is now 18 months since the fire destroyed the Palais de Danse Ballroom. Lessee still paying full rental and has loss of profits insurance. If it is agreed that the Government instrumentalities are holding up the lessee's reinstatement, query compensation morally payable to the company query compensation could be provided in rental for any new lease.

42 On 9 June 1970 the Port Phillip Authority convened a meeting of representatives of interested bodies concerning the 'Little Luna Park' area of St Kilda that is the area adjacent to the Palais de Danse site then occupied by various amusements such as the 'Miniature Train' and 'Scoota Boats'. The meeting included representatives of the Port Phillip Authority, the Melbourne and Metropolitan Board and Works, the Department of Crown Lands and Survey, the St Kilda Shore Committee, the Country Roads Board, the Town and Country Planning Board, Palais de Danse, Metropolitan Tramways Board, St Kilda Council, the Police Department and the Traffic Commission. The minutes record Mr Menzies who was a consultant engaged by Palais de Danse noting two proposals, one in which Palais de Danse would purchase the interests of some existing tenants and would receive a lease of a similar area but held on different alignments and another within a smaller area due to road realignments. In this case car parking would be provided on a complex over the Lower Esplanade. He said that a three level car parking complex could almost be provided for the cost of moving the tram tracks (a step which was apparently implicit in one of the alternative proposals being considered). A majority supported a road realignment proposal 'put forward by the Town and Country Planning Board'.

43 On 11 September 1970 the Secretary wrote to Mr Bromley that the Director of Finance had advised him with respect to the issues relative to the insurance monies 'that the matter cannot be determined at this time'. He said it was only if and when the insurance proceeds were applied 'in reinstating the improvements or effecting improvements approved by the Minister under the terms of the lease, could the question of interest be considered'. Therefore, nothing could be done until the future of the land was resolved and according to the Secretary this matter was 'in abeyance awaiting the scheme to be submitted by the St Kilda City Council'. Mr Bromley then sought advice from Arthur Robinson & Co which was furnished by letter dated 28 September 1970. That letter noted:

In his Opinion of 16 January 1969 Mr Young QC [as Sir John Young CJ then was] expressed the view though he regarded the question as a difficult one, that your company is not entitled to the insurance monies in place of the buildings which were destroyed.

44 The letter advised that there was no basis upon which interest could be demanded from the Crown. An internal memorandum prepared by Palais de Danse on 10 December 1970 noted that after 31 December the company would be 'devoid of income, and if this position continues for much longer, liquidation may have to be faced'. The memorandum suggested asking the Government to terminate the lease and pay the company $414,000 in insurance proceeds. It noted:

There is no obligation on the company to reinstate Palais de Danse. It is contended, therefore, that of the insurance proceeds of $414,000 held by the Department, they are not justified in withholding from us any more than $140,000 or thereabouts.

45 In October 1970 the City of St Kilda published a document styled 'St Kilda Foreshore Action Plan' prepared by Clark Gazzard Planners Pty Ltd.

46 With matters still at a stalemate Mr Gibney wrote a memorandum to the Secretary on 2 February 1971. He noted:

The present position, although legally correct, is most unfair to the company. In order to obtain the insurance money for a building solely owned by it [that is the Ballroom], and in which the Crown holds no reversion and interest it must reinstate the building, or other approved buildings. I am sure that no person can hold a view that, because of an earlier decision denying the company's request for separate insurances, the Crown should retain the insurance monies on a building on which it held no interest, or that the company must be forced to reinstate buildings which the lease specifically states can be demolished at any time. This however is the legal position, as advised.

47 On 9 February 1971 a delegation from Palais de Danse led by its Chairman, including consultants waited upon the Minister. The minutes record that whilst Palais de Danse realized the complexities associated with the planning issue 'there was a limit to the time the company could wait'. Mr Hyams, one of the directors, is recorded as saying that his company 'was now in a state of "massive frustration" '. The company's architect, Mr Ashton observed that the company had perhaps erred in seeking to achieve a better development upon reinstatement because

The Port Phillip Authority and the St Kilda City Council immediately "jumped on the bandwagon" and at that stage the whole concept had "galloped away" without any real consideration to the practical difficulties.

48 The Minister Mr Borthwick said he was sympathetic but he could only proceed in accordance with the Land Act and the Crown Solicitor had advised that the insurance monies could only be released for the purposes of rebuilding or reinstatement. Mr Borthwick described the St Kilda City Council 'Foreshore Plan' as ' castles in the air'. He said the planners had drawn lines on paper without considering the practicalities. Mr Bromley then sought advice from Arthur Robinson & Co raising two specific matters in a letter dated 24 February 1971, namely:

(a) The lease calls for the rebuilding of the Stardust Room only, whereas the insurance policy covered both the Palais de Danse and Stardust. If the company was to reinstate Stardust only, as per the lease, at a cost in the vicinity of $150,000, would the Government be obliged to return the balance of the insurance money to this company?

(b) If it was decided to build a much larger building than the old Stardust, and the building cost amounted to say $350,000 - would the Government release the remainder of the insurance money, to be used for furnishing and equipping the new building.

49 Mr Hart of Arthur Robinson & Co responded in a letter dated 10 May 1961. He referred again to the opinion of Sir John Young given in January 1969 to the effect that the Crown would be entitled to retain as its own property any part of the insurance proceed which was not applied to the reinstatement of the buildings. He answered the two questions therefore in the negative. Following this advice Mr Bromley wrote to his chairman, Mr Sloman enclosing the letter and concluding:

It appears, therefore, we have no option but to spend all monies held by the Treasury.

50 On 6 April 1971 the Secretary wrote to Mr Bromley noting that a Cabinet Sub-committee was investigating the St Kilda Foreshore Action Plan and would meet representatives of the St Kilda City Council 'shortly after Easter with a view to making a recommendation to the Government concerning the plan'. Palais de Danse's architect then prepared plans which 'complie[d] precisely with the present lease' and made allowance for widening of Marine Parade in accordance with the CRB plan. This proposal sought to meet the requirements of the Melbourne and Metropolitan Board of Works town planning ordinance as to car parking and was 'controlled by the amount of money available from insurance claims'. The main building would be raised to provide car parking in an undercroft. By letter dated 12 May 1971 the City Engineer of the City of St Kilda advised Mr Bromley that these plans were placed before the Public Works meeting of the Council on 22 April 'and approved in principle, subject to the building as planned complying with the requirements of the MMBW planning ordinance and the uniform building regulations'. Mr Bromley wrote to the Secretary on 1 October 1971 reporting that plans for reconstruction were well underway and the expenditure anticipated 'will be in excess of $600,000'. On 3 December Mr Bromley wrote to the Secretary enclosing the plans giving an estimated building cost of $570,000 with a cost for furnishings and fittings of $80,000. He sought Ministerial approval and 'confirmation that the insurance monies held by the Department will be available to this company for progress payments to the builders, as required'. He also sought Ministerial consideration of the present lease 'with the object of cancelling same and issuing a new lease for a period of 75 years'. He suggested that if this were done the lease for the Palais Theatre held by Palais Theatre Pty Ltd (a company owned by the same interests as Palais de Danse Pty Ltd) 'be brought into line with the new Palais de Danse lease, thus both leases would expire concurrently'. The Secretary replied in a letter of 13 December noting that Mr Ashton the architect had been asked for 'a perspective drawing of the building'. He also enquired as to the availability of permits. Mr Bromley replied on 15 December advising that the Melbourne and Metropolitan Board of Works had granted a permit for the proposal under the Melbourne and Metropolitan Planning Scheme and that there were permits sought from St Kilda City Council, the Public Health Department and the Melbourne and Metropolitan Fire Brigade Board. Mr Gibney on behalf of the Secretary wrote on 7 January 1972 advising that the Minister had given his approval 'with the exception of the proposed signs on the front entrance doors and screens and on the basis of the raised central roof'. The signs were to be the subject of further discussion. There was further correspondence relative to the release of insurance monies in particular with respect to demolition costs. Then by letter dated 18 February 1972 Mr Bromley acknowledged receipt of a cheque for the payment of architect's fees and continued:

Do you consider it an appropriate time to discuss the cancellation of the present lease in terms for a new lease for Palais de Danse, if so, could I make an appointment with you to get things underway.

51 Mr Gibney replied on 23 February 1972 on behalf of the Secretary stating with regard to the proposed new lease:

There is ... no immediate urgency and I will be grateful if this could be left for a few weeks as staff shortages and other factors make this time extremely busy.

52 He observed that the matter could still be finalised 'well before the building is completed'. On 29 February 1972 the City of St Kilda issued a building permit under the uniform building regulations of Victoria for the construction work. On 28 March 1972 Mr Gibney met Mr Bromley and a representative of the company's architects to discuss the issue of signage.

53 Mr Gibney's note gives no suggestion of the issue of lease cancellation or new leases was discussed at all. However, it seemed that it may have been because Mr Bromley wrote on 17 April 1972 to the Secretary, for the attention of Mr Gibney commencing 'further to our meeting the other week'. He said that following consultation with the directors, the company was 'quite agreeable to renounce all tenant rights on the Palais de Danse building if the present lease is cancelled and a new one issued for a term of 50 years'. I assume the 'tenant rights' referred to was the right to remove the buildings on the ballroom site. The letter continued that the directors

Also agree with your suggestion that the Palais Theatre lease be extended to run concurrently with the Palais de Danse lease.

54 Mr Bromley noted that Mr Gibney had mentioned 'the possibility if a new lease was drawn up, there could be an increase in the yearly rent'. He provided details of trading profits over a period of years which he suggested could be considered by the Minister 'when assessing the new rental'. The letter complained about 'lean times' for the Palais Theatre, reinstatement work continued and the insurance monies were drawn down to meet progress payments. Mr Borthwick, the Minister, accepted an invitation to unveil a plaque 'on the occasion of the completion of the first stage of the re-building of the new Palais ballroom on Thursday 18 May at 11.30 am'.

55 On 22 November 1972 an article appeared in the Herald newspaper under the headline 'Will you please take your partners. The Palais comes back to life.'

56 On 3 April 1974 Mr Bromley wrote to the Secretary renewing his company's application for interest on the insurance monies. On 26 June 1974 Mr Bromley sought to enlist the assistance of Mr Brian Dixon who was Minister for Sport and Recreation but also the local member for St Kilda in support of the application for interest on insurance monies. He complained of the three year delay, namely on the basis of the road widening proposal and continued:

As you are aware, the road widening has not yet eventuated and all our delays were to no avail, other than to bring hardship to this company.

57 He enclosed a copy of his letter to the Secretary of 3 April. On 3 July the Secretary advised that the matter had been referred to the Director of Finance. In due course Mr Dixon wrote on 24 July 1974 supporting the claim for interest. The Secretary for Lands responded stating 'I can assure you that every point in favour of payment to the Palais has been put forward'. Still no decision was forthcoming and the Secretary wrote to the Director of Finance on 30 September 1974 noting that 'the company is pressing for a decision in the matter'. On 7 October 1974 the Director stated that he had sought the views of the Crown Solicitor.

58 On 21 October 1974 Mr Bromley wrote observing that since the re-opening of the ballroom

there has been a completely different trend in the type of entertainment the general public requires. Our business, as you know, is mainly for cabaret balls and dinner dances, however, patronage for such functions is rapidly declining and we are desirous of entering into a different type of format. It is our intention to apply to the Liquor Control Commission for a cabaret license, therefore we would be pleased to receive the Hon. Minister for Lands' permission for such licence to be granted to the premises ...

59 By letter dated 30 October the Minister advised he had no objection to the proposal. On 24 December Mr Bromley wrote to the Secretary seeking Ministerial approval for slight alterations to the interior of the ballroom. He said the company was 'converting, more or less, from a private ballroom to a public restaurant type business'.

60 On 10 July 1975 the Secretary advised that legal liability for the Crown to pay interest was denied but an ex gratia payment of $11,884.00 would be made by way of interest. On 16 July Mr Bromley responded acknowledging receipt of the payment but expressing disappointment at the amount

especially in view of the fact that my company was requested by the Crown to delay rebuilding operations until a decision was made regarding the widening of Marine Parade.

61 He noted that six years had passed since the initial claim for interest and the value of the settlement would have been more beneficial if made earlier 'due to the inflationary trend which has occurred during the past few years'.

62 On 19 December 1975 Mr Bromley wrote to Mr Gibney of the Department complaining of difficult trading conditions for both the Palais Theatre and the Palais de Danse. It may be that this was to set the scene for the company's case for the 1976 rental review. In connection with the Palais de Danse he observed:

In the past 12 months the situation in the catering industry has taken a dramatic turn for the worst - large increases in wages have been the main cause. Most concerns have been able to stabilise their food costs, but we find the wage demands from employees have severely affected the profitability of all catering businesses. No doubt you are aware of the situation at Leonda, and a number of smart restaurants, the Florentina [sic] included are restructuring their operations. Recent press statements by Mr Jack Kortum, President of the Australian Hotels Association and Mr Frank Dennis of Dennis Catering has substantiated the situation which now prevails, and there appears to be no solution whilst unions continue their demands.

63 He said that the company is 'in very very severe financial difficulties - it owes over $200,000 to outside organisations in relation to the completion of the new ballroom'. He continued:

If the present trend continues, we feel we will have no alternative but to close down, unless we can find a tenant who would sub-lease our premises. This would be very difficult, because if this company cannot make a success in the catering field, we doubt that any other organisation could, as the terms of the lease prevent us (or other possible sub-tenant) from using the premises for any other purpose other than for amusement or recreation.

64 The rent had been fixed at $3,636.00 per annum from 1 April 1966. In light of the representations made by Palais de Danse Pty Ltd the rental for the 10 years from 1 April 1976 was fixed by the Department at an almost unchanged $3,660 'in view of depressed state of the industry applicable to this type of business'. Nevertheless Mr Bromley wrote on 8 November 1976 complaining of difficult trading conditions:

To the point where the company has now been forced to undertake a complete reassessment of its operations with a view to either changing or diversifying the present activities of the company or alternatively sub-leasing the Palais de Danse property.

65 He sought to discuss approvals for variations to the Crown lease or consents to a sub-lease. Use of the ballroom as a theatre restaurant was a failure. The company lost the then substantial sum of $75,000 in this operation alone. The well known commercial real estate agency Richard Ellis inserted a block advertisement offering 'the New Palais' for sale in the Herald newspaper of 24 November 1981. On 19 May 1982 the Secretary of the Country Roads Board of Victoria wrote to Palais de Danse offering compensation of $832 for the acquisition of an area of 23.7 sq m. Mr Bromley wrote to Mr Hyams one of company's directors stating that whilst he had sought $1,000 compensation on behalf of the company he felt the offer of $832 was 'very fair'. Even despite the small land area involved and the very modest compensation involved, the transaction proceeded with all the usual formalities of a commercial conveyance. An orthodox set of requisitions was served and Mr Bromley furnished a full set of answers by letter dated 25 August 1982. Those answers to requisitions made no reference to any entitlement of Palais de Danse other than under the 1956 Crown lease. In answer to a question as to 'all tenancies licences and occupancies affecting all or part of the property and ... all bonds, rentals or occupancy fees paid or payable in respect thereof' Mr Bromley referred to annual rental paid to the Department of Crown Lands and Survey of $3,660 per annum. In answer to a question seeking production of written leases, licenses or occupancy agreements the requisition stated 'no leases, licenses or occupancy agreements of this - Palais de Danse is the sole tenant of the leasehold property'.

66 Then in December 1983 Palais de Danse entered into a sale agreement with Alamar Nominees Pty Ltd. The vendor's statement prepared pursuant to Section 32 of the Sale of Land Act 1962 by Palais de Danse's then solicitors, Blake and Riggall makes no reference to any right of tenure possessed by the company other than the 1956 Crown lease, a copy of which was annexed to the statement as being the basis of the vendor's title. An agreement dated 12 December 1983 between Palais de Danse and Alamar Nominees Pty Ltd sold all of Palais de Danse's leasehold interest existing under the 1956 lease, its plant and equipment, chattels, a permit and furniture, its restaurant lease and its rights in the business names 'New Palais' and 'Stardust - St Kilda'. The price was $430,000. Once again a set of requisitions was administered on behalf of the purchaser. In answer to the requisition 'who was in possession and who was in occupation of the said property and what is the nature of such possession and occupation' respectively Blake and Riggall furnished the answer on behalf of Palais de Danse 'the vendor as Crown lessee'. In answer to the question 'are there any written or oral leases or tenancy agreements affecting the said property?', the answer was 'apart from the terms of the Crown lease, not that the vendor is aware'. In general terms there is nothing in the answers to requisitions or in any document generated in the course of the conveyancing transaction which indicated either the existence of any leasehold interest in Palais de Danse other than the 1956 Crown lease or purported to sell or convey any interest in the land other than that 1956 Crown leasehold interest. Approval was sought from the Minister for Lands. On 1 February 1984 the Minister for Conservation, Forests and Lands, the Hon. R.A. Mackenzie consented to the assignment of the relevant Crown lease, that is, the lease for 50 years commencing 1 April 1956. The transaction was settled by the registration of a transfer under the terms of the Transfer of Land Act 1958. The Minister also consented to a first mortgage of the leasehold interest in favour of Australia and New Zealand Banking Group Limited and also a second mortgage in favour of Esanda Finance Corporation Limited.

67 1986 was the year in which the rental under the Crown lease was due for reappraisal. The Department which by then was the Department of Conservation, Forests and Lands, referred the question to the Valuer General by letter dated 10 December 1985. The opening words stated:

The above described lease is held by Alamar Nominees Pty Ltd for a term of 50 years from 1 April 1956.

68 The reappraised rent was fixed by the Valuer General's office at $45,400 per annum which it will be seen is a dramatic increase on the previous rent which had remained substantially unchanged for 20 years. On 29 January 1987 National Australia Bank Limited sought the consent of the Minister for Conservation, Forests and Lands to a leasehold mortgage over the land comprised in Certificate of Title Volume 9570 Folio 486 upon registration of the transfer of lease from Palais de Danse Pty Ltd to Alamar Pty Ltd. The Palais de Danse site was given a leasehold title with that volume and folio reference in lieu of the Crown lease. In a letter dated 20 February 1987 a departmental officer informed Alamar that no consent to the mortgage would be forthcoming until the rental for the quarter beginning 1 January 1987 was paid. Presumably payment was made and the then Minister for Conservation Forests and Land, Mrs Kirner, gave her consent to the mortgage of the 1956 leasehold interest to the bank. This delinquency in rental payment was however a warning of things to come. On 9 June 1987 Messrs Humphris and Lamb were appointed receivers and managers of Alamar under the terms of a registered debenture charge granted by that company to National Australia Bank Limited. According to a letter to the Department dated 25 September 1987 from Mr Humphris, a contract for the sale of the assets of the company was signed on 25 September 1987. The contract of sale of real estate which has been produced to me shows the day of sale as 2 November 1987 and nominates a price of $2.2m. The subject matter is the 1956 lease and the purchaser is Jerry Pilarinos 'and/or nominee'. Again there is nothing in the conveyancing documents that indicates that the transaction intended to deal with anything other than the 50 year lease commencing 1956 nor is there mention of any other leasehold interest in the land. Title was to be taken not by Mr Pilarinos but by his nominee, Cosmos Property Corporation Pty Ltd which was described in a letter to the Minister dated 28 April 1988 from the purchaser's solicitor Simon Jaques and Co as 'a company associated with our client Mr Jerry Pilarinos'. By an instrument dated 16 May 1988 the Minister Mrs Kirner consented to the transfer of the 1956 lease from Alamar Nominees Pty Ltd to Cosmos Property Corporation Pty Ltd. By an instrument dated 18 July 1988 the Minister consented to a mortgage by Cosmos of its 1956 leasehold interest, again to National Australia Bank Limited. On 24 November 1988 Messrs Williams, Winter and Higgs wrote to the Town Planner of the City of St Kilda, presumably on behalf of Cosmos. The relevant town planning permit for use of the premises as the Palace Entertainment Complex was issued 18 October 1984. It included Condition 21 which provided that the permitted use would cease on or before 1989 unless the responsible authority extended it for a further period. The time limit in the permit condition was extended by Council until 30 October 1994. In 1988 Williams, Winter and Higgs complained on behalf of their client that it was unfair to have it placed in a situation where it had a leasehold interest lasting until 31 March 2006 which bound it to use the premises for an entertainment purpose yet it was faced with the time limit in the 1984 permit. Mr Pilarinos wrote directly to the Council's Chief Executive on 2 December 1988 complaining that 'lenders are reluctant to lend new money to carry out improvements to the premises which although I will occupy for a further 17 years with a town planning permit for approximately five years only'. An officer's report by Mr G. Bennett, Town Planner, notes:

The operator [presumably Mr Pilarinos] has indicated that he will appeal any attempt to impose a time limit which does not coincide with the duration of his lease which is 18 years.

69 Despite these protests Council maintained its decision to impose a time limit of 30 October 1994 for the entertainment use. By letter dated 20 January 1989 Ms Setches (who was then the Minister for Conservation Forests and Lands) informed the Minister for Planning and Environment that she supported the amendment to permit Condition 21 sought by Mr Pilarinos such that it read 'The use hereby permitted shall cease on or before 31 March 2006'.

70 On 24 December 1990 Cosmos entered into a contract to sell the 1956 50 year lease to Bradto Pty Ltd, the respondent in this proceeding. Again, there was nothing in the conveyancing documents to indicate the existence of any leasehold interest other than the 1956 lease. Next, Bradto Pty Ltd granted a sub-lease of the premises to Maztan Pty Ltd for four years commencing 1 March 1991. The deed of sub-lease produced to me is unexecuted but it names 'the Governor in Council' as head lessor and as a party to the deed and recites that Bradto held the Palace premises as tenant of the Crown under that lease. The Minister consented to the transfer of lease from Cosmos to Bradto on 15 February 1991. The transfer instrument was dated 3 November 1991 and registered under the terms of the Transfer of Land Act.

71 The reason for the sale from Cosmos to Bradto is not immediately apparent. Both companies seem to be controlled by Mr Pilarinos. There may have been some economic duress involved because on 28 August 1991 Cosmos was ordered wound up by the Supreme Court of Victoria and Mr Humphris was appointed liquidator.

72 On 10 August 1993 the Minister for Conservation and Environment, the Hon. Mark Birrell, consented to a variation of license and extended hours permit by Maztan Pty Ltd. Mr Pilarinos wrote to Mr Birrell on 4 October 1993 indicating that his company wished to 'upgrade' what was by then known as the Palace Entertainment Complex. He said that in view of the necessarily large expenditure and the short period the lease has to run 'it is not financially feasible so to do'. He sought on behalf of his company either to purchase the freehold reversion or to obtain a lease for a further 50 years. After receiving a formal acknowledgment Mr Pilarinos heard nothing further and wrote another letter to the Minister dated 30 March 1994 seeking a response. By letter dated 20 June 1994, that is, almost another three months later, the Minister referred to certain discussions which his Departmental officers had had with representatives of Bradto and a further redevelopment proposal from the City of St Kilda. He concluded:

I expect to be in a position to further consider your request for a longer term lease within the next month.

73 Another four months passed and a Departmental officer, Mr Miller wrote to Mr Beyer, a consultant for Bradto stating that he wished 'to finalise as soon as possible, the Department's position in respect of your earlier request for a new long-term lease or the opportunity for your client to purchase the land'. Meanwhile, the rent review process for 1996 was put in hand. The rental this time was fixed at $52,500 per annum. Nothing seems to have come of Mr Pilarinos' proposal either for a longer lease or to purchase of the freehold reversion. By September 1998 a Departmental officer writing on behalf of the Minister advised:

The Victorian Government Property Group in the Department of Treasury and Finance, in consultation with the Department of Infrastructure, is currently investigating possible future uses of this site and adjacent Crown land collectively known as the St Kilda Triangle Precinct.

74 It seems with this and its related site there is always a redevelopment plan 'under investigation'. It was 36½ years since a departmental officer 'put off' Palais de Danse's request for a new and extended Crown lease due to seasonal staff shortages.

75 This latest plan was intended to take effect upon the conclusion of the Crown leases for the Palace Entertainment Centre (formerly Palais de Danse), the premises the subject of this proceeding and the adjacent Palais Theatre. The State undertook a tender process for the redevelopment in 2005/6. Neither of the sitting tenants was included on the short list of preferred tenderers. The State wished to carry out an inspection of both premises, it said, for the purposes of obtaining information to provide to the preferred tenderers. It brought proceedings against Tymbook Pty Ltd (the then tenant of the theatre) seeking orders inter alia that its representative be at liberty to enter and inspect. Tymbook took a preliminary jurisdictional point and secured a determination of Byrne J in the Supreme Court that disputes relative to both tenancies lay within the exclusive jurisdiction of this Tribunal State of Victoria v Tymbook [2005] VSC 267; (2005) VConvR 54-707.

76 The Crown then commenced separate proceedings against the two lessees in this Tribunal seeking similar relief. On 8 February this year the Tribunal (Judge Bowman, Vice President) granted interlocutory injunctions against both lessees for the relief sought by the State. Applications for leave to appeal by both lessees were refused by the Court of Appeal: Tymbook Pty Ltd v State of Victoria [2006] VSCA 89; (2006) VConvR 54-722. In late 2005 this proceeding was commenced against Bradto seeking possession of the Palace complex and R192/2005 was commenced against Tymbook Pty Ltd seeking possession of the Palais Theatre. The proceedings were ordered to be heard concurrently though in the end this proceeding was heard first and R192/2005 immediately following.

77 A further elaboration arose when the interests controlling Bradto Pty Ltd made arrangements to acquire the share capital in Palais de Danse Pty Ltd. That company had been deregistered following a members' voluntary liquidation in 1998. An application was made for the reinstatement of Palais de Danse Pty Ltd as a company. The Crown intervened to oppose the application which was dismissed by Master Ephthim. On appeal however, Gillard J granted the restoration and the solicitors acting for Bradto commenced Proceeding R116/2006 seeking similar relief on behalf of the reinstated company as Bradto seeks in the present proceeding by way of counterclaim. The premise of this further proceeding is that it is said were it found that Palais de Danse Pty Ltd was entitled to an additional lease for a term of 60 years but that such right has not been transferred through the chain of title culminating in Bradto then the right remains with the reinstated company and the further lease term should be granted to it.

78 As a summary of the pleadings appearing below demonstrates this proceeding raised multifarious issues. Most of those issues would arise only upon a particular set of permutations or combinations, for instance, reliance directly upon the Limitation of Actions Act 1958 by the Crown or upon its operation by analogy with respect to equitable claims would arise only if all other issues were determined favourably to Bradto. Similarly, a claim by the Crown that Bradto or Palais de Danse as its predecessor in title had 'abandoned' certain claims would arise only if those claims were found first to have existed and secondly, to be well founded.

79 Two major and preliminary issues arise here. First, whether upon the material before me it appears in a general sense that Bradto is entitled to a further term of years as lessee and secondly, if according to the general principles of contract and equity, the answer to the first question is 'yes', is such favourable answer for Bradto excluded by the legislative scheme affecting dealings with Crown land to be found in the Land Act 1958. I will turn first to these major issues and deal exhaustively with only those subsidiary issues which arise in light of the conclusions reached as to the primary questions.

80 Both parties filed lengthy written submissions and made lengthy addresses extending over a number of days. Both filed multiple lever arch volumes of case law and texts. To keep these reasons within manageable limits I have not attempted to provide a detailed summary of the parties' submissions. The written submissions themselves can be resorted to in case of doubt as can the transcript. I mention the detail of the submissions only to the extent necessary for my determination and to explain my reasons.

81 The State's claim was filed 23 December 2005. It sought an order for possession of the Palace Entertainment Complex on 1 April 2006, damages in the event of failure to vacate by that day and costs. The attached points of claim alleged the existence of the lease granted in 1956, the registration of Bradto as proprietor of the Crown leasehold and the service of a notice to quit dated 3 December 2004 requiring possession by 1 April 2006. Bradto it alleged denied being obliged to vacate on that day.

82 In its amended points of defence and counterclaim Bradto declined to admit the allegations relative to the 1956 lease. It admitted receipt of the notice to quit but asserted that it was defective. It denied that it was obliged to vacate the premises by 1 April and admitted that it refused to vacate.

83 The counterclaim alleged Bradto's incorporation and also the incorporation of its sub-tenant Maztan. Next the counterclaim followed the historical events relative to this land going back to its public reservation in 1884. The pleading referred to the grant of the Crown lease in 1956 and its surrender and regrant in 1961 so as to include additional premises. The counterclaim next dealt with the fire on 27 December 1968 and referred to the discussions between Palais de Danse and the Crown in the years that followed.

84 At paragraph 24 the Order in Council of April 1969 was referred to, alleging that it evidenced a variation of lease which was 'partly written and partly to be implied' to the effect that if Palais de Danse spent not less than $400,000 on the erection of a new building on the premises, reinstated the reception room and kitchen and if the boundaries were redefined 'having regard to the widening of Marine Parade St Kilda' then Palais de Danse having complied with the statutory requirements of the Land Act 1958 as advised by the Crown then the term of the 1956 lease would be extended for a period of 60 years from the last completed of those matters. It was said that there was an implied term of that variation of lease that

Except for any statutory requirement about which Palais de Danse was advised, the Crown would ensure that any statutory requirements of the Land Act 1958 were satisfied.

85 This term was said to be implied 'ad hoc or alternatively by law and by the need to give business efficacy to the variation of lease'.

86 Alternatively, an agreement for lease was alleged in similar terms to the variation save presumably that it would be a 'stand alone' arrangement commencing on a particular date and running for 60 years. A similar implied term as to the statutory requirements of the Land Act 1958 was alleged as was an implied term that

The rent payable under agreement for lease in respect of the first 10 years would be calculated on the basis of the rent payable at that time under the [1956] Crown lease.

87 The pleading narrated the events following the Order in Council, the delays in rebuilding and so forth and the completion of the Country Roads Board acquisition on 10 August 1982 alleging that neither Palais de Danse nor any subsequent lessee was ever informed of any statutory requirements that can be complied with under the Land Act 1958. It alleged that the Crown was obliged to grant either the variation of lease or a new lease in accordance with the agreement for lease alleged. Further, it was said that since Palais de Danse expended not less than $400,000 in the erection of a new building on the premises and reinstated the reception room and kitchen in reliance upon the Order in Council, the Crown was estopped from refusing to provide the new lease or variation of lease. It was also said that by reason of these matters Palais de Danse

Acquired an equitable interest in the Demised Premises, being a right to a lease for a term of 60 years from the date of the boundaries of the Demised Premises being defined having regard to the widening of Marine Parade [that is, 10 August 1982].

88 It was said the Crown was estopped from denying such interest or from refusing to execute a further lease.

89 Further, it was said that there was a conventional estoppel between the parties that upon Palais de Danse spending not less than $400,000 in erecting the new building and reinstating the reception room and kitchen, the redefinition of the premises relative to the widening of Marine Parade and compliance with statutory requirements of the Land Act that the Crown would execute a variation of lease or grant a further lease.

90 It was said that these entitlements of Palais de Danse were by a series of transfers vested in Bradto and that Maztan was an overholding sub-lessee of the premises. It said that Bradto was to be regarded as a tenant in possession for the purposes of Section 42(2)(e) of the Transfer of Land Act 1958.

91 Next, it was alleged that the Crown's reversionary right against Palais de Danse to retake possession 'was postponed until 2042 or alternatively 2044'. The Crown's right was therefore fundamentally altered and Bradto's position as lessee was subject only to the Crown's rights as altered. Palais de Danse, it was said, transferred its interests by registered transfer and in accordance with Section 45(1) of the Transfer of Land Act to Alamar, then to Cosmos and ultimately to Bradto. Further, Bradto as a successor in title to Palais de Danse was entitled to rely upon any estoppel arising in favour of Palais de Danse. Finally it was said that any rights not transferred by chain of title to Bradto were held on trust for it, alternatively by the Crown or by Palais de Danse Pty Ltd.

92 In its further amended reply and defence to counterclaim the Crown asserted that its notice to quit was good and effective. It said that Bradto and its predecessors in title performed obligations under the 1956 lease as varied without regard to any alleged agreement for lease, variation of lease or any of the alleged estoppels or postponements. Rental was fixed and consents were given by successive ministers of the Crown on the basis that the interests involved derive from the 1956 lease as varied and not any of the other rights alleged by Bradto. On the contrary it was said that the parties and Bradto's predecessors in title conducted their relationship on the assumed basis that the 1956 lease as varied was the sole source of rights and obligations 'for a continuous period of 50 years without regard to the' variation of lease or agreement of lease, a new lease or representation in estoppel. There was accordingly a conventional estoppel, it was said, from which it would be unconscionable to allow Bradto to resile. Next it was said that Palais de Danse and the State did not agree upon the essential terms of the alleged variation of lease or agreement for lease. In any event it was alleged any rights with respect to these matters were abandoned by Bradto and its predecessors in title, which abandonment the Crown accepted.

93 Next, the Crown alleged various requirements of the Land Act 1958 which it said had not been complied with in connection with the agreement for lease, new lease or variation of lease asserted by Bradto as being entered into by Palais de Danse. Hence it was said these matters 'do not constitute a legally binding or enforceable interest, agreement or obligation and each of them is void and of no effect'. It was said non-compliance with these provisions of the Land Act was equally fatal to the existence of any estoppel such as were alleged. Next it was said that these asserted rights were not in writing as required by Section 53 of the Property Law Act 1958 and hence were unenforceable if they existed. Further, it was said that any of the rights asserted to have flowed from the Order in Council of 1969 were not transferred to Bradto. It was said that any transfer or assignment which was made was not in writing and by force of Section 53 of the Property Law Act 1958 was not enforceable. In any event it was said successive Ministers had not consented to the assignment or transfer of any of the various rights alleged to arise out of the 1969 Order in Council. Next it was said that the lease as registered under the Transfer of Land Act was by force of Section 41 of that Act 'conclusive evidence of the Crown's entitlement to the reversion on the expiry of the Crown lease and leasehold on 1 April 2006' hence Bradto 'has only the interest in the land described in the Crown lease and leasehold certificate of title'. Therefore it said the Crown is entitled to possession on 1 April 2006. Whilst generally admitting the historical narrative as alleged, it denied that the reception room [the Stardust room] was ever reinstated per contra the reception room and the kitchen were demolished by Palais de Danse.

94 It said that even if the various rights alleged were valid and enforceable, Bradto was precluded from relying upon them because of laches acquiesance, the direct operation of the Limitation of Actions Act 1958 or its operation by analogy with respect to equitable estates. Finally it was said that if any relief were granted then it should be compensation in an amount not exceeding $10,000 having regard to the fact that the monies used to erect what is now the Palace Entertainment Complex were insurance monies the property of the Crown and in any event have effectively been used up by the passage of time and by the occurrence of wear and tear.

95 Bradto in its reply said that reliance by the Crown on the various alleged contraventions of the Land Act 1958 would be unconscionable and so the Crown was estopped from so doing. With respect to such alleged non-compliances it was said further that the Crown had never notified Palais de Danse or any successor in title of any requirement of the Act which any of those companies was required to comply with hence, the contraventions were either waived or else the Crown was precluded from relying upon them by the doctrine that a person is precluded from relying upon the consequences of its own wrong. If any matters under the Land Act remained unsatisfied it was said the Crown should be directed to carry out such steps.

96 In so far as the Statute of Frauds provision Section 53 was asserted against the various rights alleged to flow from the 1969 order in Counsel, Bradto relied upon Section 55 of the Property Law Act 1958 (viz. part performance). Bradto alleged that the lease as varied was effectively transferred by the various transfers or relied upon Section 42(2)(e) of the Transfer of Land Act which renders registered titles subject to the interest of a tenant in possession. Finally it was alleged it would be unconscionable for the Crown to rely upon the Limitation of Actions Act 1958. Bradto also asserted that the register book under the Transfer of Land Act 1958 should be rectified so as to give effect to the rights alleged by Bradto.

97 The only viva voce evidence which I heard was from Mr Hyams who was a director of Palais de Danse at material times. The narrative given above shows that the dealings between Palais de Danse Pty Ltd and the Minister and the Department were had principally by its General Manager, Mr Bromley and at times the company was represented by solicitors, consultants or by its Chairman, Mr Sloman. Mr Hyams is mentioned only occasionally, in one meeting with the Minister expressing 'massive frustration' over lack of progress following the 1968 fire. He made two affidavits in the present proceeding, the first dated 31 July 2006 consisting of a very brief narrative of events following the 1968 fire and attesting to Palais de Danse's satisfaction of the various requirements in the 1969 Order in Council. As to the last of those he said:

I cannot recall any advice from the Secretary for Lands (or any other officer) concerning any requirements under the Land Act 1958 with which PDD had to comply.

98 He made a further affidavit on 31 August which he says was made following a conference with Bradto's solicitor and senior counsel, Dr Pannam QC. This second affidavit stated, inter alia:

Approximately April 1969 when we (Palais de Danse) were informed of the agreement to grant a new lease of 60 years on the terms contained in the Order in Council and in approximately late 1984 when we decided to sell to Alamar I cannot begin to describe the nature and extent of the frustration, delays and general lack of co-operation which we suffered in relation to our dealing with the State's officials in relation to the site.

99 He said that he would never have allowed the company to expend the money which it did to rebuild and redevelop the site 'save upon the basis that State would grant the promised 60 year lease'. He said that in selling off the now Palace site 'I intended to sell whatever interest Palais de Danse had in the site'. As a director of the company he said he never intended to 'give up to the State the promised 60 year lease'. He observed that solicitors acting in the sale to Alamar were not those who had acted for the company relative to the Order in Council in 1969.

100 Mr Hyams made affidavits not only in this proceeding but in the related proceeding R192/2005 relative to the Palais Theatre. In setting the concurrent trial date for the two proceedings I accepted a submission put on behalf of Bradto that Mr Hyams should be allowed to attend by video link. It was explained that he spent the winter on the Gold Coast. I made this direction over the objection of the Crown and on the basis that Mr Hyams would be cross-examined as to his affidavits in both proceedings during the same video link session or sessions. When the final hearings commenced Mr Hyams' examination was scheduled to occur in two video link sessions on the afternoon of the first day and the morning of the second. Mr Garde QC's approach to the cross-examination on behalf of the Crown was to seek to take Mr Hyams to a large number of the documents referred to earlier in my reasons. To enable this to be done Bradto's solicitor, Mr Mitrakis was in attendance at the Queensland end of the link with the same book of documents from which the Tribunal and the parties were working in Melbourne. The cross-examination proceeded relatively satisfactorily on the afternoon of the first day. It was clear that Mr Hyams was of advanced years and this coupled with the decades which had passed since the events in question occurred meant that his knowledge was most imperfect. He could remember a few details but appeared unable to remember most. When the cross-examination resumed the following morning this had taken a turn for the worse. First, Mr Hyams it seems had left his reading glasses in the taxi which brought him from his hotel to the video link centre. Secondly, for this reason and perhaps other reasons he seemed more disconnected than he had on the first day. His level of memory had deteriorated from sparse to non-existent. In those circumstances after approximately 35 minutes Mr Garde elected to discontinue the cross-examination.

101 In these circumstances in his closing submission Dr Pannam QC contended on behalf of Bradto that on the key issues which I have quoted from Mr Hiams' second affidavit, his evidence should be treated as effectively uncontradicted. He said that Mr Garde and the Crown had acted in breach of the rule of Browne v Dunn. The matters dealt with in the affidavits generally and the second affidavit in particular were in Dr Pannam's submission, 'big picture' items. If the Crown wished Mr Hyams to be disbelieved on these 'big picture' issues it was incumbent upon its senior counsel to challenge Mr Hyams' evidence directly on those points. Merely to demonstrate, as the cross-examination as far as it went, that Mr Hyams had little memory of the details of the relevant transactions was not enough. Mr Garde unsurprisingly rejected this interpretation of things. He contended that it was clear to all involved in the hearing that circumstances had brought Mr Hyams' cross-examination to the point where no useful purpose was served by prolonging it and no inference could or should be drawn and no steps should be taken which would entail taking Mr Hyams' evidence as uncontradicted.

102 Browne v Dunn (1893) 6 R 67, 70-71 was a decision of the House of Lords albeit one reported only in a short lived and now difficult to obtain series of reports. According to the learned editors of Cross on Evidence (Australian Edition) [17435] Service 93 the rule in Browne v Dunn is a 'rule of practice'. The effect of the rule as described by Hunt J in the Supreme Court of New South Wales is

'... that, unless notice has already been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence'.

Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1, 16 quoted by Cross ibid

103 Browne v Dunn was a civil case but the rule has been crucially applied in the criminal jurisdiction as well. A generation ago in a criminal trial the precise defence relied upon by the accused person was unknown until his counsel opened the accused's case. This took place after the Crown had closed its case. The general rule against 'splitting' the Crown's case meant that it bore the onus of proving its case out of the mouths of witnesses who gave evidence entirely before the precise purport of the defence case was known. The importance of the rule in Browne v Dunn in fairness to the Crown and its witnesses is obvious enough in that context. Modern practice which entails extensive pre-trial exchange of evidentiary material and even in the criminal jurisdiction now requires a clear statement of the case put on behalf of the accused prior to the closure of the Crown's case means that the 'rule' is of much less significance. As Cross notes:

The rule does not apply where the witness is on notice that the witness's version is in context. The notice may come from the pleadings, or a pre-trial document indicating issues for the other side's evidence, or the other side's opening;

104 It seemed to me that Mr Garde's cross-examination went sufficiently far to indicate that the Crown's case was that a whole series of events had occurred following the fire and following the Order in Council before the process of reconstruction took place and that it was these other matters which led to the reconstruction's proceeding rather than reliance upon the terms of the Order in Council or an attempt by Palais de Danse to satisfy the conditions appearing in the Order in Council so as to qualify for the extended lease term. In any event as the learned editors of Cross observe in the same paragraph

It may not be necessary to comply with the rule where counsel abstains from cross-examination for reasons of convenience, for example to save time ...

105 It was obvious in the circumstances described that Mr Garde shortened his cross-examination without any implication that he accepted the views put by Mr Hyams. If there were particular Crown witnesses to be called who would, for instance, deny a conversation or a document alleged by Mr Hyams it might be thought that even in a truncated cross-examination it was incumbent upon Mr Garde to go to those particular issues and to put it to Mr Hyams that the evidence to be given by the Crown witnesses is correct and his was incorrect. Here however the basis upon which the Crown sought to attack the 'big picture' conclusions in Mr Hyams' second affidavit was that a close grained analysis of events as they unfolded did not bear out that interpretation of events. Once it proved impossible to take Mr Hyams through that close grained analysis it would in my view have been no more than an empty ritual for Mr Garde to say 'I put it to you that ...'.

106 In the circumstances I do not believe I should treat Mr Hyams' evidence in the way suggested by Dr Pannam, moreover, I believe that the narrative of events which I have set out above and which I analyse in greater detail later demonstrates that Mr Hyams' 'big picture' conclusions as to the events of 1969 to 1972 should not be accepted. I accept Mr Hyams as a witness of truth, but his broad recollection does not accord with the detail of events as they unfolded.

107 The case put on behalf of Bradto is that the Crown agreed with Palais de Danse Pty Ltd (Bradto's predecessor in title) that Palais de Danse Pty Ltd should have a further 60 year lease term. For present purposes it matters not whether this arrangement is to be characterized as the pleading variously does as a variation of lease, a lease in itself or an agreement to lease. The basal contention is that a contract of some sort having that effect was entered into between the Crown and Palais de Danse. Putting aside special rules said to apply to the Crown's dealings with Crown land by virtue of the Land Act 1958 does the evidence make out such a contract?

108 The first question for determination is whether the putative contract if it exists would be regarded as a unilateral or a bilateral contract. According to Professor Carter

This distinction reflects the contrast between cases where the offeror contemplates the making of a promise as the acceptance of the offer and cases where the offeror contemplates the doing of an act as the acceptance of the offer.

109 In the same paragraph the Professor continues:

Thus, an offer may be made in the form of a promise to be accepted by a counter promise, in which case acceptance gives rise to a bilateral contract under which both parties are subject to executory obligations ... On the other hand, where an offer calls for acceptance by performing an act, acceptance gives rise to a unilateral contract under which only one party is subject to an executory obligation. (emphasis added)

110 Since acceptance of a unilateral contract is constituted by the performance of the obligations cast upon the offeree, in the present case if that were the correct analysis of the alleged contract it would not finally be made until the completion of the reinstatement of the buildings or perhaps the expenditure of not less than $400,000 for such purpose. An alternative view is that the contract would not be complete until the resolution of the CRB compulsory acquisition in 1982. Whilst the Bradto counterclaim does not make the matter explicit the case put by Dr Pannam QC on Bradto's behalf was that the various conditions set out in the 1969 Order in Council were to be regarded as conditions precedent to performance by the Crown not conditions precedent to contract. He confirmed this in a supplementary submission provided after the close of the hearing at my request. On that view a contract came into existence at or about the time of the making of the Order in Council but the Crown's obligation to perform only arose when the conditions were according to their true construction, to be regarded as having been satisfied. Dr Pannam's submission is that the law's preference is to characterise conditions precedent as conditions precedent to performance rather than contract. He referred to Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, 542-3 per Gibbs CJ, 551-2 per Mason J (as he then was). Mason J observed that where the condition was precedent to contract:

The transaction creates no rights enforceable by the party unless or until the condition is fulfilled [where the condition is one as to performance] there is a binding contract which creates rights capable of performance, though the obligation of the party, or perhaps of both parties, to perform depends on fulfilment of the condition a non-fulfilment entitles him to terminate.

(1982) 149 CLR 537, 551

111 In Perri's case the contract in question was a contract for the sale of land presumably subscribed to by each party or perhaps more likely the subject of an exchange of parts. The condition in question was completion by the purchasers of the sale of another property. Upon those facts the Court concluded that the condition was precedent to performance and not precedent to contract. What of the situation here? On the face of it the Order in Council was a purely unilateral act on the part of the Crown. Admittedly the order was made at the urging of the solicitors for Palais de Danse but in no way other than carrying out reconstruction work did Palais de Danse purport to 'accept' an offer so as constitute a contract. There was nothing in any piece of correspondence between the parties or if it mattered, in any private memorandum of advice held by the one and not shared with the other in which it appeared that the Crown demanded or that Palais de Danse felt obliged to carry out any reconstruction other than reconstruction of the Stardust room. This latter obligation was perceived by the parties, as the forgoing narrative indicates as flowing from an express covenant in the 1956 lease as varied. Palais de Danse it will be recalled sought advice from its solicitors as to the possibility that it might simply reconstruct the Stardust room and seek release to it of the balance of the insurance monies. When Mr Bromley, the man at the heart of negotiations raised this issue with Arthur Robinson & Co on 24 February 1971 there is no hint that he regarded his company as subject to an obligation to outlay his $400,000 on the reinstatement of the ballroom and the Stardust room as necessarily it would have been if a bilateral contract had been made according to the terms of the Order in Council in 1969. Again, when this proposal was scotched by Arthur Robinson & Co in its letter of advice of 10 March 1971 it did so not because this firm which had been involved in procuring the Order in Council regarded it as setting forth the terms of a bilateral contract to which Palais de Danse was committed but rather because of the advice it had received from Mr Young QC that the insurance monies would be taken by the Crown under the insurance arrangements existing under the 1956 lease unless expended to reinstate. Mr Bromley forwarded this advice to the Chairman of Directors, Mr Sloman under cover of a letter dated 12 March 1971. Again, there was no hint of a belief on Mr Bromley's part that Palais de Danse was committed to rebuild the ballroom other than by virtue of the practical affect of the insurance arrangements. The narrative shows that nobody knew better the precise detail of negotiations between the Crown and Palais de Danse than did Mr Bromley. The parties' actions and statements after making a contract are not admissible as to the proper constructions of that contract, FAI Trader's Insurance Limited v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343. Here I am considering these matters for the purposes of determining whether a contract had been made or not at the relevant time: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, 163-4 per Heydon JA. The considerations which I have mentioned lead me to the conclusion that if there was a contract it was a unilateral one which would come into existence if at all, upon performance by Palais de Danse of the obligations to be imposed upon it by the contract notably in the present case the expenditure of not less than $400,000 in the reinstatement of buildings on the premises. In Australian Woollen Mills Pty Ltd v The Commonwealth of Australia [1954] HCA 20; (1954) 92 CLR 424 the High Court of Australia considered a claim by Australian Woollen Mills that it was entitled as a matter of contract to a subsidy which the Commonwealth Government announced could be paid to manufacturers of wool purchased and used for local manufacture after 30 June 1946. In a joint judgment Dixon CJ, Williams, Webb, Fullagar and Kitto JJ said:

In cases of this class it is necessary, in order that a contract may be established, that it should be made to appear that the statement or announcement which is relied on as a promise was really offered as consideration for the doing of the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement.

[1954] HCA 20; (1954) 92 CLR 424, 456 (my emphasis)

Between the statement or announcement which is put forward as an offer capable of acceptance by the doing of an act, and the act which is put forward as the executed consideration for the alleged promise, there must subsist, so to speak, the relationship of a quid pro quo. One simple example would suffice to illustrate this A, in Sydney, says to B in Melbourne: 'I will pay you ₤1,000 on your arrival in Sydney'. The next day B goes to Sydney. If these facts alone are proved, it is perfectly clear that no contract binding A to pay ₤1,000 to B is established. For all that appears there may be no relation whatever between A's statement and B's act. It is quite consistent with the facts proved that B intended to go to Sydney anyhow, and that A is merely announcing that, if and when he arrives in Sydney he will make a gift to him. The necessary relation is not shown to exist between the announcement and the act. Proof of further facts, however might suffice to establish a contract.

113 It follows therefore that in the present case it is not sufficient merely to prove that the $400,000 was outlaid on reinstating the premises if that would have been done anyhow. It must be demonstrated that there was in fact a relationship between the offer constituted by the Order in Council and the outlay of the $400,000.

114 Here there is nothing in the record where Palais de Danse or anyone acting on its behalf announced either before, during or after the expenditure in the course of a painfully detailed correspondence with the Department of Crown Lands that the reinstatement was being done in performance of the condition laid down in the 1969 Order in Council. The documents placed before me indicate an extensive correspondence between the parties during the reconstruction phase, if for no reason other than the necessity for Palais de Danse to secure the progressive release of the insurance monies to remit to the building contractor. In my narrative I did not trouble to set out the items in this class of correspondence, however what is notable is that in a virtually incessant correspondence the issue of the 1969 Order in Council was not mentioned at all. Moreover, the exchange between Mr Bromley and Arthur Robinson & Co referred to above [49] appears to demonstrate the true motivation for Palais de Danse's scaling down of its grander plans extending to neighbouring parcels of land occupied by miniature railways and the like and simply rebuilding on the original site. The reason seems to be that it was only by this expenditure that the insurance monies could be released. If the expenditure were not undertaken the insurance money would simply go to consolidated revenue of the State. In forwarding the Arthur Robinson & Co advice to Mr Sloman, in his letter of 12 March 1971 Mr Bromley concluded:

During my conversation with Mr Holt, Secretary for Lands, on Friday 5 March, he stated that if all the insurance money was not used in rebuilding, the remainder would be put into consolidated revenue. It appears, therefore, we have no option but to spend all monies held by the Treasury.

115 This shows the true motive for the expenditure and had nothing at all to do with satisfying any condition or performing any putative obligation under the 1969 Order in Council.

116 Again, after reconstruction Mr Bromley did not raise with the Secretary or the Minister the 1969 Order in Council. In his letter of 17 April 1972 he referred to the present lease being cancelled 'and a new one issued for a term of 50 years' presumably from 1972. Again, there is no reference to a 60 year lease as provided for in the Order in Council.

117 These findings in themselves largely dispose of the Bradto counterclaim. If as a matter of contract there was no grant or obligation to grant a new 60 year lease then there is no defence to the claim by the Crown for possession following the expiry by effluxion of time of the 1956 lease which took place some months ago.

The Land Act 1958

118 Even were I wrong on the contractual analysis and if the evidence established facts which would as between private individuals or private corporations create an equitable entitlement to a new 60 year lease, there are special rules and considerations relative to Crown land which where the Crown is lessor would upon the present facts exclude the creation of any such equitable interests. Cudgen Rutile (No. 2) Limited v Chalk [1975] AC 520. The Judicial Committee of the Privy Council considered an appeal from the Supreme Court of Queensland against an order dismissing a claim for specific performance of alleged contracts to provide mining leases. The appeals were unsuccessful. Lord Wilberforce speaking for their Lordships said:

As a starting point, their Lordships accept as fully established the proposition that in Queensland, as in other States of the Commonwealth of Australia, the Crown cannot contract for the disposal of any interest in Crown land unless under and in accordance with power to that effect conferred by statute. In Queensland the legal basis for this power, and for the limitations upon it, is to be found in the Constitution Act of 1867, of which Section 30 provides for the making of laws regulating the sale, letting, disposal of occupation of the wastelands of the Crown, and Section 40 vests the management and control of the wastelands of the Crown in the legislature.

It follows as a logical consequence that when a statute, regulating the disposal of Crown lands, or of an interest in them, describes a mode of exercise of the statutory power, that mode must be followed and observed: and if it contemplates the making of decisions, or the use of discretions, at particular stages of the statutory process, those decisions must be made, and discretions used, at the stages laid down. From this in turn it must follow that the freedom of the Minister or officer of the Crown responsible for implementing the statute to make his decisions, or use his discretions, cannot validly be fettered by anticipatory action; and if the Minister or officer purports to do this, by contractually fettering himself in advance, his action in doing so exceeds his statutory powers.

[1975] AC 520, 533

119 In Victoria the grant of leases over Crown land is governed by the Land Act 1958. Section 12(1) of the Victorian Act provides as follows:

(1) Under and subject to the provisions of this Part but not otherwise, the Governor in Council in the name and on behalf of Her Majesty may grant convey or otherwise dispose of lands for the time being belonging to the Crown for such estate or interest as in each case is hereby authorized and for none other.

120 This provision can be seen fully to embody the principle enunciated by Lord Wilberforce on behalf of their Lordships. The authorisation of the Governor in Council to make grants of Crown land is expressed to be under and subject to the provisions of the relevant part of the statute and for the avoidance of doubt the words 'but not otherwise' are added and the estates or interests provided for in the Act may be granted and grants may be made 'for none other'. The effect therefore is to render the grant of Crown lands wholly statutory and exclude any prerogative power to deal with Crown lands which might otherwise exist.

121 Mr Garde QC and Mr Fox submitted that there were a raft of non-compliances with the Land Act 1958 if the Order in Council of April 1969 and the actions associated with it were treated as a 'dealing' with the relevant Crown land. They said that Section 134 of the Act required that there be a grant by the Governor in Council. The 1956 lease as amended should have been surrendered. They said that there should have been an application for a new lease as required by Chapter XII and Schedule 42 of the Land Tax Regulations 1930. Section 134 of the Act required that there be a number of advertisements of the proposal to grant relief in the Government Gazette. Since no commencement date for the alleged lease was determined by the Governor in Council, the requirements of Section 26 of the Land Act had not they said, been complied with. The terms and conditions and rent were not determined as required by Section 135 of the Act. They referred to the Cudgen Rutile case; State of Victoria v Rossignoli [1983] VicRp 73; [1983] 2 VR 1; New South Wales v Scharer (2003) 131 LGERA 2008; Lukey v Sydney Harbour Trust Commissioners (1902) 2 SR (NSW) 152; Attorney General v The Municipal Council of Sydney [1919] NSWStRp 73; (1919) 20 SR (NSW) 46; O'Keefe v Williams [1907] HCA 64; (1907) 5 CLR 217; Williams v Attorney General for New South Wales [1913] HCA 33; (1913) 16 CLR 404 and Lang Crown Land in New South Wales (1973).

122 Dr Pannam and Mr Hay however, submitted first, that it was wrong to proceed on the footing that no effective disposition of any type could be made otherwise and subject to strict compliance with the Land Act 1958. Moreover, they submitted that the question whether any individual non-compliance rendered what was purportedly done invalid must be judged in accordance with the principles enunciated in the joint judgment in the High Court decision Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355, 390, that is, one must consider whether in light of all the circumstances and according to the ordinary canons of construction it can be seen to be a purpose of the relevant legislation that an act done in breach of the relevant provision should be invalid. They noted that there was an estoppel between landlord and tenant. They referred to Industrial Properties Limited v AEI [1977] 1 QC 580; Cuthbertson v Urban [1859] EngR 767; (1859) 4 H & N 742, 754; [1859] EngR 767; 157 ER 1034, 1039; Lee v Ferno Holdings Pty Ltd (1993) 33 NSWLR 404; Bruton v London and Quadrant Housing Trust [1999] UKHL 26; [2000] 1 AC 406, 416, 418; Government of Penang v Oong [1972] AC 425, 433. They noted the liability imposed upon the Crown by Sections 23 and 25 of the Crown Proceedings Act .

123 More generally they submitted it would be wrong to conclude that an attempted dealing with Crown land was invalid where the default in performance of the statutory scheme was a failure of performance by the Crown or its officers as distinct from the person seeking to have the benefit of the putative dealing. So far as Palais de Danse Pty Ltd and its successors in title were concerned they said there was no reason to think they were other than ready and willing to perform any necessary step to render their claimed entitlements post 2006 with the relevant property fully efficacious. In so far as the Crown was concerned, they submitted that it should be ordered to take such steps as only it and its servants could take to render the dealing fully efficacious.

124 They submitted that a power to enter into transactions such as agreements for lease which would be enforceable in equity by requiring the parties to complete any necessary statutory steps to render a dealing with Crown land affective at law could be regarded as incidental to the powers of the Governor in Council found in the Land Act. They referred to Johns v Connor [1992] FCA 193; (1992) 107 ALR 465 per Lockhart J; Dunkel v Deputy Commissioner of New South Wales (NSW) (1990) 99 ALR 776 per Sheppard J and Pearce and Geddes Statutory Interpretation in Australia (6th Edition 2006) [11.23] as to the invalidating effect of matters beyond the control of the party and [2.39] as to incidental powers.

125 To judge the effectiveness of the Crown's defences to counterclaim based on the Land Act 1958 it is in my view unnecessary to turn to each of the alleged non-compliances with the scheme of the Land Act. The Order in Council itself invoked the authority of Section 134 of the Land Act 1958. In my view, that section is of central importance and I turn to it now. Section 134(1) of the Act stated in 1969 inter alia:

(1) The Governor in council may grant leases of any Crown land not exceeding (except in the case of leases for guano or other manure or for obtaining and removing stone or earth or for the manufacture of salt or for purposes of amusement and recreation or for rifle ranges) three acres for a term not exceeding twenty-one years from the date thereof at a yearly rent as provided in the next succeeding section for any of the following purposes (that is to say):-

Provided that in all cases where it is proposed to grant a lease for a longer term than seven years notice of the application for such lease and of the purpose and term for which it is proposed to be granted shall except as provided in section one hundred and thirty-six be published in four consecutive ordinary numbers of the Government Gazette at least one month before the grant of such lease.

126 It is common ground that this section applies to the grant of any lease over the subject premises. Again, it is common ground that there have been no advertisements in the Government Gazette as required by the sub-section. The question then becomes whether in accordance with the Project Blue Sky principles, this non-compliance can be seen as intended by the statute to invalidate any purported dealing with the land. In State of Victoria v Rossignoli [1983] VicRp 73; [1983] 2 VR 1 the Full Court of the Supreme Court considered the effectiveness of what was alleged to be an agreement between the State and Mr Rossignoli giving him exclusive filling rights to a particular area of Crown land. The alleged agreement was said to be evidenced by a letter over the signature of an officer in the Department of Crown Lands and Survey signing on behalf of the Secretary of the Department. The Full Court held that the alleged agreement could not be operative according to its terms as it fell within the terms of two other paragraphs of Section 134 of the Land Act and as such was an agreement for dealing which could only be made by the Governor in Council. Fullagar J with whom Young CJ and Starke J concurred referred to Section 12 of the Act said:

The view that the express powers are exclusive in respect of their subject matter, and the view that s12 of the Act negatives all residual power in respect of estates and tenancies and at least occupation licences, are supported by such authority as there is.

[1983] VicRp 73; [1983] 2 VR 1, 7

127 Later in his judgment, His Honour concluded that Sections 134 and 138 of the Act exhaustively covered the field so that the Crown could not grant leases and licenses of any description with respect to Crown land except in accordance with these sub-sections. The same approach is taken to the New South Wales Crown Lands Consolidation Act 1913 by the New South Wales Court of Appeal as recently as 2003 in New South Wales v Scharer (2003) 131 LGERA 2008. There the Court held invalid a dealing with Crown land which had it been effective would have created an equitable easement. Again, the Court approached the matter upon the footing that there could be no dealing with Crown lands except in accordance with the statute. Tobias JA with whom Scheller and Ipp JJA concurred saw this principle embodied in Section 6 of the New South Wales statute [2003] NSWCA 328; (2003) 131 LGERA 208, 223. In Lukey v Sydney Harbour Trust Commissioners (1902) 2 SR (NSW) 152 the Full Court of the New South Wales Supreme Court considered a contention by a user of a Crown lease that since he received a demand for further rent for a period following the expiry of the relevant lease the former lessees paid and remained in occupation. The Full Court held nevertheless that the demand and acceptance of rent created no enforceable lease. Cohen J said that to enable such an informal arrangement to impose an enforceable arrangement on the Crown would subvert the principle of the Crown lands legislation and would be in the teeth of the evident policy of such legislation to allow secret deals to be contracted. Attorney General v The Municipal Council of Sydney [1919] NSWStRp 73; (1919) 20 SR (NSW) 46 concerned the Council's right to remain in possession of a fish market on Crown land. In 1870 an under secretary in the Colonial Secretary's Department informed the Council that the Governor in Council had authorised the erection of the market as proposed by the Council. The Full Court concluded that the Crown's only statutory powers to dispose of the relevant land was by letting or selling it at auction, hence the Council had no entitlement to remain in possession of the market. Once again, the Court proceeded upon the footing that there is no authority to deal with Crown land other than strictly in accordance with the relevant statute.

128 In my judgment these authorities which are both relatively recent in some cases and of respectable antiquity in the others, support the position advocated by the Crown here, namely, that the Crown lands legislation in this State, the Land Act 1958 constitutes a code for dealings in Crown land in the absence of any additional special statutory authority so to do. Here no such authority exists.

129 Dr Pannam and Mr Hay submitted that each of the authorities relied upon could be explained on a much narrower basis, for instance in Rossignoli's case the purported dealing with Crown land was by written instrument signed by a Departmental officer in the name of the Departmental Secretary. This was they said a simple case of ultra vires where the only authority empowered to make such a dealing was the Governor in Council. In the case of the April 1969 Order in Council it was his Excellency who had acted. Lukey's case may be explained, for instance, on the basis that there was no statutory power to grant licences over wharfs. According to the Court, licences over Crown land could only be granted for grazing purposes. In Scharer's case there was no power reposed in any authority to grant an equitable easement over Crown land. Nevertheless, in all instances, the Courts have eschewed any narrow approach to their adjudication, rather, they have been at pains to rest their judgments upon the wide proposition relied upon by the Crown in this proceeding. It might be competent for an appellate court in reviewing existing authority to narrow the basis upon which each decision was reached. This process is sometimes known as 'confining a decision to its own facts'. It might be proper for the High Court of Australia or perhaps the Court of Appeal to undertake such a review of these authorities. At the trial level in this Tribunal the proper approach is for me loyally to apply the reasoning of these various courts according to its own tenor. Even if I regard each decision as being given on more than one basis, one being the 'wide' basis, the other being a narrower basis suggested by Dr Pannam, both reasons for decision constitute binding rationes decidendi: Jacobs v The London County Council [1950] AC 361. At least one of these decisions relied upon, namely the decision in Rossignoli's case is strictly binding upon me as a decision of the Full Court.

130 If I ask, as the submissions of Dr Pannam and Mr Hay would have it, whether the Land Act evinces an intention to render invalid a dealing not made in accordance with Section 134(1) of the Act I conclude the answer is 'yes'. The evident policy of the Land Act is to provide transparency in dealings with Crown land. The requirement for publicity prior to the making of significant dealings is embodied in Section 134(1) in the requirement to gazette a lease as long as one of 60 years. The statute as it stood in 1969 did not directly impose an obligation upon the proposed Crown lessee to carry out the advertising. The documents produced to me however demonstrate that it was the practice at least when the initial lease was granted in 1956 to require the lessee to undertake the burden of advertising. The advertisements which appeared in the gazette in 1956 were uninformative. It is unlikely for instance, that the average citizen would be able to locate Crown Allotment 103. The advertisement contained no street address and it was only the name of the proposed lessee, Palais de Danse Pty Ltd that would alert a reader to the identity of the land.

131 Dr Pannam sought to decry the importance of publication in the Government Gazette. He referred to a decision of Marks J, Palalow Pty ltd v the Minister for Property and Services (1988) VConvR 54-322 where His Honour noted that at that time the Victorian Government Gazette had a subscription roll of 1600. His Honour remarked:

It may well be that the Government Gazette is not an obvious source of information for prospective purchasers.

(1988) VConvR 54-322, 64085 (column 2)

132 Nevertheless, publication in the Government Gazette is the step which Parliament has seen fit to require to achieve transparency in Crown land deals. There is ground to doubt whether this is the most effective requirement to achieve that transparency. I have already noted for instance that the advertisements in the Gazette prior to the grant of the 1956 lease did not even give the street address of the subject allotment. Nevertheless, the issue of transparency in dealing was clearly of paramount importance with respect to Crown lands and the fact that Parliament may have selected a more effective means of achieving that transparency does not in any way derogate from the conclusion that Parliament has manifested an intent that steps taken to deal with Crown lands in violation of this requirement are to be invalid. I am fortified in that view by the fact that Marks J in Palalow albeit with some reluctance, concluded that an auction of Crown lands held without the necessary notice in the Government Gazette as required by Section 90 of the Land Act invalidated a subsequent dealing with the Crown land.

133 The outcome in Palalow may be contrasted with another decision of the same Judge given the following year, Tyre Marketers (Australia) Limited v Martin Alstergren Pty Ltd (1989) VConvR 54-335. Section 137 of the Land Act required notices of a lease to be published in the Gazette. The necessary publication was not made and a declaration was sought by Alstergren the purchaser, from the Crown of the reversion that the relevant lease was void. Notices had been published in the Gazette but in the event a different subsidiary of the Pacific Dunlop group from the one referred to in the notice signed as lessee. His Honour dismissed the attack upon the validity of the lease because he concluded that Alstergren as purchaser, as distinct from the Crown was not entitled to place reliance upon the breach of the Land Act. He also concluded that since the Crown lease had been registered under the Transfer of Land Act 1958 it enjoyed an indefeasible status. His Honour also rejected a contention that Tyre Marketers was in breach of a building covenant in the lease. His Honour observed that had it been necessary to consider the validity purely in terms of the Land Act 'validity would depend, I think on construction of Sec 137 in combination of Sec 71' (1989) VConvR 54-335, 64181 (column 1).

134 The now repealed Section 71 of the Act provided in 1969 when the Order in Council was made and in 1989 when Marks J wrote his judgment in Tyre Marketers, inter alia, as follows:

(1) If any person becomes the licensee or lessee or continues to hold a licence or lease of any Crown land in violation of or non-compliance with any of the provisions of this Act or any corresponding previous enactments the same shall be void under this part, and such license or lease shall be forfeited and void.

135 Dr Pannam submitted that in the case of the 1969 Order in Council it was clear that the Crown did have power to lease. That power was being exercised by the Crown's chief representative in the State, namely the Governor in Council not by some lesser official as in Rossignoli's case. Judged by reference to Section 71(1) as it then stood, the dealing effected by the 1969 Order in Council, he submitted, must be regarded as valid. There is no evidence of any 'fraud' on the part of Palais de Danse.

136 It is not obvious to me why Marks J drew a distinction between the obligation to advertise in the Gazette contained in Section 90 of the Land Act 1958 which he found evinced an intention that a sale made in violation of its provisions was invalid (Palalow's case) and the obligation to advertise in the Gazette relative to a lease in Section 137 of the same Act. The two sections provide as follows:

90(1) Any person authorized by the Board may hold public sales by auction of lands in fee simple without having an auctioneer's licence or incurring on that account any penalty; and notice of every such sale shall be given in the Government Gazette within three months and before one month thereof

137 The Governor in Council may grant leases of lands forming part of any lands of the Crown (including water reserves but not including lands within any reserved forest) not exceeding three chains in width for the forming and maintaining of roads tramways and crossings and such works of like public utility, subject to such covenants terms and conditions as to the Governor in Council may seem fit: Provided that notice of the application for such lease and of the purpose for which it is proposed to be granted shall be published in four consecutive ordinary numbers of the Government Gazette before the granting thereof.

137 His Honour's remarks in Tyre Marketers appear to indicate that he believed that there was authority to lease in the Tyre Marketers' case despite a failure to comply with the Gazette requirements but no authority to sell in the Palalow case. In the end it does not matter. His Honour's remarks were dicta because he disposed of the Tyre Marketers proceeding on other grounds as explained above. In so far as His Honour considered that the question of the validity of the lease as between the Crown and Tyre Marketers was to be judged solely by reference to Sections 71 and 137 of the Land Act His Honour's view appears to be at odds with the much broader approach taken to this and similar statutes in the authorities referred to above.

138 In my view Section 71 of the Land Act is intended to focus upon breaches by a purchaser or tenant from the Crown rather than failures by the Crown to obey the requirements of the legislation itself. The effect of the section is not as I read it to render a transaction void only where the non-Crown party has been guilty of fraud but rather to stigmatise non-compliance by the non-Crown party as amounting to fraud. It follows that I reject Dr Pannam's submission in so far as it suggests that there could be no invalidity of the putative transaction said to flow from the 1969 Order in Council by reason of non-compliance with the Land Act unless Palais de Danse Pty Ltd was guilty of fraud.

139 There is some basis for the contention put by Dr Pannam that where the Crown or one of its officers fails to comply with provisions such as the provisions to be found in the Land Act 1958 and the non-compliance is entirely a matter of internal management, the non-Crown party ought not be prejudiced. This view of things gained some support from the decision of the High Court of Australia in Brickworks Limited v Warringah Corporation [1963] HCA 18; (1963) 108 CLR 568 where it appears to the non-Government party that all has been done properly and those dealing with the non-Government party appear to have authority then the representation made by the Governmental officer may constitute an exception to the rule that estoppel by representation does not generally operate in public law Minister for Immigration, Local Government and Ethnic Affairs v Curtovic [1990] FCA 22; (1990) 92 ALR 93.

140 That principle can have no application here. The obligation to advertise a lease transaction of this sort in the Gazette as imposed by Section 134 of the Land Act is a matter of public record, not a matter of internal management. A party dealing with the Crown who wishes to ensure that its transaction with regard to Crown land is immune from attack on this ground should ensure that the necessary advertising has taken place. As a matter of practice it appears, even in 1956 the non-Crown party was given the responsibility of attending to the advertising. The statute has since that time and since 1969 been amended so as to impose the advertising obligation directly upon the non-Crown party. Since the advertising in the Gazette is a public matter and not a matter of internal management it seems to me not to matter for the purpose of the issue I am considering whether the obligation is cast by the statute upon the Crown or the non-Crown party or whether or not it is competent for the Crown effectively to cast the burden of compliance on the non-Crown party where the statute leaves open the question of who is to place the advertisements (as seemed to have been the case in 1969).

141 I do not accept that there exists any incidental power as contended by Dr Pannam whose existence avoids the restrictions on dealings with Crown land laid down by the Land Act. To countenance such a thing would be subversive of the principles stated by high authority in cases such as C_udgen_ and Rossignoli. The authorities relied upon did not support the view that it was incidental to an express statutory power to attempt to exercise the power other than in accordance with the mandatory requirements of the statute.

142 From all this it follows that even if contrary to the conclusions that I expressed earlier, the principles of contract and equity would, as between private parties, create an enforceable leasing obligation whether by way of an actual lease and agreement to lease or otherwise, such obligation however characterised would in the present circumstances not arise by reason of non-compliance with the provisions of the Land Act 1958 specifically Section 134.

143 Nor is the result of non-compliance with these vital provisions of the Land Act 1958 in any respect affected by the consideration that the Order in Council was an act of the Queen's own representative, the Governor of Victoria. In Attorney General v Goldsborough [1889] VicLawRp 129; (1889) 15 VLR 638 the Full Court of the Supreme Court held a disposition by the then Governor to be invalid for non-compliance with the provisions of the Land Act 1869.

144 The claims mounted based upon proprietary estoppel and flowing from authorities such as Dillwyn v Llewellyn [1862] EngR 908; (1862) 4 Degf & J 517; Ramsden v Dyson (1866) LR 1 HL 129; Plimmer v Wellington Corporation (1884) 9 App C at 699, cannot succeed. First, the findings that I made with regard to the case based on contract and agreements to lease entail the conclusion that Palais de Danse Pty Ltd acted so as to avoid the forfeiture of the insurance monies not in any way in reliance upon the terms of the 1969 Order in Council. This finding would necessarily dispose as a matter of fact of any contention based on estoppel. Moreover, as a matter of law, where a transaction is found to be invalid for non-compliance with the provisions of the Land Act that non-compliance cannot be circumvented by reliance upon the doctrines of proprietary estoppel State of Victoria v Rossignoli [1983] VicRp 73; [1983] 2 VR 1, 13-14. As Fullagar J observed 'Against such express prohibitions equity must be powerless' [1983] VicRp 73; [1983] 2 VR 1, 13. This is perhaps no more than a specific instance of the doctrine that estoppel will not avail against the mandatory provisions of a statute. The principle as stated by His Honour would in itself also be a conclusive answer to any contention that the 1969 Order in Council created a specifically enforceable entitlement to a lease.

145 These conclusions are sufficient to dispose of the counterclaim as a whole. The various other defences taken by the Crown including Laches, acquiescence, Limitations of Actions Act, conventional estoppel and so forth do not arise.

146 The Crown's claim must succeed and the respondent's counterclaim should be dismissed.

147 I have heard no evidence on the question of damages which I will reserve.

148 I have heard no argument on the question of costs and so that question should be reserved.